GO
Loading...

Ex-Greek minister: Greece needs a 40% debt haircut

Petros Doukas, Greece's former deputy finance minister has said the country needs a "sizable haircut" of 40 percent on its current debts, after German finance minister Wolfgang Schaeuble told the country to stop lobbying for any aid restructuring this year.

"The money cannot be repaid," Doukas told CNBC on Thursday afternoon. "It's not easy for all the governments to swallow, and I understand that the taxpayers of European countries will not be able to swallow it easily, but it's a fact of life."

Doukas' comments followed the German finance minister's visit to Athens on Thursday, during which he told Greece to stop asking for more aid and focus instead on enacting the reforms agreed to as part of its bailout program.

(Read More: Germany's aid offer to Greece is too little, too late: German MEP)

"My advice is that everyone concentrates on ... doing what we have agreed, because only if we implement what we agreed, step-by-step, can we regain reliability, trust and through that, growth," Schaeuble said.

"If Greece (towards the end of 2014) has implemented its reforms and has reached a primary surplus, then we will negotiate further measures if necessary," he added.

Laurent Fransolet, head of European fixed income research at Barclays, said Schaeuble's comments meant there would be no new aid for Greece in 2013, but another restructuring could happen in 2014.

(Read More: Greece grinds to a halt as major public sector layoffs loom)

But Doukas said Schaeuble's comments weren't credible and were driven by political considerations ahead of Germany's national election in September.

"It's not a very credible statement because in my humble opinion [Greece's] debt cannot be serviced and repaid as is. The economy is sputtering, the economy is faltering, there is no new incomes being generated, so I don't see how that debt can be serviced."

Greece's debt-to-GDP ratio stood at 156.9 percent at the end of 2012, and the country is now in its sixth year of recession.

- Reuters contributed to this report

Contact Europe News

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    To learn more about how we use your information,
    please read our Privacy Policy.
    › Learn More

Europe Video